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Nuclear Energy in the Gulf: a response to Iran

Fuelled by rising energy demand and depleting oil and gas resources, nuclear energy has gained strong momentum in the GCC, particularly in countries like the UAE. The country has lofty ambitions to generate up to 25 per cent of its electricity needs – or 5.6GW – through nuclear means by 2020. Abu Dhabi began construction of its first nuclear reactor, Barakah 1, in July 2012, and it is in the process of building three more plants. Emirates Nuclear Energy Corporation, the body responsible for the project, announced in February 2014 that the first two plants are on schedule and are up to 35 per cent complete.

Barakah Unit 1 is scheduled to enter commercial operations in 2017 while Unit 2 is scheduled for operations in 2018, pending regulatory approvals. The third and fourth units are slated to begin commercial operations in 2019 and 2020 respectively. Lady Barbara Judge, a member of the UAE nuclear programme’s International Advisory Board and former chairman of the UK’s Atomic Energy Authority, says she is confident that the programme will be recognised as the best new built nuclear power project of the century.

“The UAE has a ruler who is very stable and who is very interested in the diversification of energy supply, it doesn’t have the political problems that you have in other countries, it understands the planning process about where to put the power plant, it has got good sites, it has an independent regulator and the country is building schools to develop skills and training among locals,” she explains.

Along with the UAE, another Gulf country that is actively pursuing a nuclear programme is Saudi Arabia. The Kingdom’s nuclear ambitions are substantially larger. It hopes to become the Middle East’s largest nuclear power producer over the next 20 years at an estimated cost of roughly $100 billion, with plans to build 16 nuclear power plants that will generate 17.6GW of power progressively to 2032. Saudi’s King Abdullah City for Atomic and Renewable Energy (Ka-Care), which focuses on energy diversification, has set up an independent regulator, the Saudi Arabian Atomic Regulatory Authority, to oversee the Kingdom’s civil atomic energy programme. Ka-Care is also in the process of creating the Nuclear Holding Company to serve as the private sector arm of the Kingdom in designing and operating nuclear power plants and research reactors. Saudi Arabia has signed nuclear cooperation agreements with several countries including Japan, France and Jordan with Ka-Care negotiating with Russia, Czech Republic, UK and the USA for “further cooperation.”

The country hopes to call for preliminary bids for its first nuclear reactor in 2014, say officials. Construction on the first reactor is expected to begin in 2017 and is slated for completion by 2022. Similar to the UAE, the Kingdom has a stable government, huge coffers and vast land slots – all extremely suitable for nuclear power generation, opines Lady Judge.

However, nuclear energy may not necessarily be the best option for the GCC region, states Mohammed Atif, area manager, Energy Advisory, Middle East at DNV GL – Energy. “A reasonable diversification of fuels is always beneficial for a region in order to reduce risks and price volatility,” he says…..“Nuclear power plants generally tend to generate electricity only, whereas the GCC is accustomed to co-generation where power plants generate electricity and also desalinate water. Unless the system adopts nuclear technology which incorporates desalination technology, then a challenge remains in terms of ensuring sufficient desalination capacity.”

An Oxford report on nuclear power production in the GCC published in December 2012 also pointed out that nuclear power generation could prove an expensive option for GCC states. “The substantial initial investment costs, coupled with the high expected level of long run variable costs, is unlikely to render nuclear power cost effective vis-à-vis conventional oil and gas fired power plants in the region,” it says. The existing absence of cost-recovering power tariffs throughout the GCC already renders effective cost recovery for nuclear power unlikely, implying a substantial bill in the form of nuclear power subsidies to be picked up by GCC governments.” There are also other hidden costs, such as national and regional security concerns and the future disposal of nuclear waste.

“And the acquisition of nuclear technology by GCC states, albeit for civilian purposes, provides fuel to those critics of nuclear power in the region who fear a nuclear arms race in the Gulf should Iran pursue a nuclear weapons programme in the future. “All these concerns make nuclear power a potentially costly option for the GCC,” the report cautions. While initial costs are sizeable, Lady Judge believes that they can be recovered during the long-life of nuclear plants – estimated at around 60 years. She also affirms that energy subsidies are bound to fall away.